Palantir Technologies (PLTR) is giving Wall Street a familiar problem.
Investors admire the company’s stance on artificial intelligence, government software, national security, and enterprise automation. They also ask how much they should pay for that growth.
That tension has haunted Palantir for years. Bulls see a company that can assist governments and companies in applying AI inside complex operations, while bears consider a stock that tends to price in too much future success.
The debate is starting to evolve, investment firm D.A. Davidson says.
D.A. Davidson managing director, head of technology research Gil Luria upgraded Palantir stock to buy from neutral and raised his price target to $175, Barron’s confirmed. The call helped lift Palantir shares higher on July 2, adding to gains from the prior session, when investors reacted to a new AI partnership with Nvidia (NVDA).
That’s important, because the upgrade is about more than just praising Palantir’s AI story. And part of that is already known on Wall Street.
The bigger dispute is about valuation.
Luria argues that Palantir’s profits and growth are beginning to justify the stock’s premium pricing.
“Palantir has grown into its valuation as profits have soared, and the multiple has come in, providing investors with a gift just in time for the United States of America’s 250th birthday,” Luria wrote, according to Barron’s.
Palantir stock has forced investors to debate valuation
Palantir doesn’t often trade like a conventional software stock.
The company receives a premium from the investors because it is operating in markets that are of high strategic value. Its solutions assist government agencies, defense customers, and commercial clients in organizing data, designing workflows, and employing AI in actual operations.
That business model provides Palantir a great narrative. It also elevates the standard.
Investors paying a high multiple for a stock are looking for fast growth, increased earnings, and sustained demand from the company. Any slowdown could soon pressure the share price.
That dynamic has created Palantir, one of the market’s most divisive AI names.
Bulls say Palantir can be an important software layer for AI adoption. Bears say the stock is already discounting too much of that future.
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That’s precisely the debate Luria addresses. He doesn’t call Palantir cheap in the conventional sense. Instead, he said the relationship among Palantir’s growth, profits, and price now seems more attractive.
Luria said Palantir trades more reasonably than it has “in a while,” Barron’s reports, especially compared to other high-growth software companies.
He pointed to AI-focused peers such as Snowflake, Shopify, Datadog, and CrowdStrike. Luria expects Palantir to expand more quickly than those firms, yet trade more like them.
That makes the bulls’ case stronger. If Palantir’s growth can outpace its software peers while also improving profits, investors could be willing to pay a premium multiple for longer.
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D.A. Davidson says Palantir profits change the equation
D.A. Davidson’s call offers investors a better way to frame Palantir.
For a long time in its public-market life, detractors said Palantir asked investors to pay too much for future development. Luria says the company is now generating enough earnings growth to make that premium simpler to justify.
The timing helps as well. Just before the upgrade, Palantir revealed a new relationship with Nvidia. The companies want to target government and other customers that require secure AI implementations.
That opportunity is a good fit for Palantir.
Government agencies and security-sensitive corporations require more than AI technologies. They need to control data, models, permissions, and operational settings. They also require systems that can adjust if an AI model is not available, constrained, or less useful.
That’s the problem Palantir seeks to fix. The startup says its software serves as an orchestration layer connecting AI models to real-world activities. That function could become more important, as corporations would rather not commit to one AI model provider.
Luria reinforced this idea in his note. Palantir, he said, gives businesses more flexibility because its platform allows companies to swap between AI models with less disruption.
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That argument lands at an important moment, just as companies are testing different AI models. National security considerations remain a balancing act for governments. Regulators are still exploring how firms should employ AI in sensitive contexts.
Palantir enables customers to adopt AI while minimizing risk, offering one of the biggest potential advantages for the organization. This might be particularly attractive to the U.S. government and other major institutions.
It also gives Palantir a different kind of AI story. The corporation isn’t competing to produce the best model; it’s competing to win. It’s trying to be the layer that allows customers to use multiple models safely within complicated organizations.
Palantir’s Nvidia deal gives investors a new catalyst
Another reason investors should keep an eye on Palantir is the Nvidia collaboration.
Now the AI boom’s defining hardware business is Nvidia. Its processors power many of the models and systems corporations are rushing to install. A relationship with Nvidia lends Palantir additional credibility in one of the most cutthroat segments of the software market.
For Palantir, the opportunity is not just about AI excitement. It’s about converting AI demand into long-term client connections.
Government and security-sensitive customers don’t normally move fast without a reason. But once they’re on a platform that’s integrated into their operations, those partnerships can be difficult to break.
That’s one reason why Palantir bulls are ready to look past typical value concerns. If AI becomes more ingrained in government, defense, and corporate decision-making, they see a company with a long runway.
But the stock has a high bar to cross.
Palantir is still a premium-priced stock, even with the D.A. Davidson upgrade. That means investors will expect the company to continue to generate good growth, stronger earnings, and proof that its AI platform is more than a market narrative.
Palantir stock key takeaways
- D.A. Davidson analyst Gil Luria upgraded Palantir to a buy from neutral.
- Luria raised his Palantir price target to $175, according to Morningstar.
- The analyst said Palantir’s profits have made its valuation more attractive.
- Palantir shares also gained after a new AI partnership with Nvidia.
- The bigger investor question is whether Palantir’s growth and profits can keep catching up with its premium valuation.
- Palantir’s model-orchestration technology could become more important as customers avoid relying on one AI model provider.
These are actual dangers. A drop in government contract business could weigh on sentiment. It could take commercial customers longer than planned to use AI solutions at scale. Another risk for Palantir is that a larger decline in high-multiple software equities affects the stock, even if the business continues to deliver well.
That is the sacrifice that investors make. Palantir is one of the better-positioned software firms in the AI business, but its stock already prices in a lot of confidence.
Palantir stock still must prove the bull case
Luria’s upgrading won’t close the Palantir valuation argument; it alters its conditions.
For years, the straightforward bear argument was that Palantir was a good firm, but its stock price was asking too much, too soon. Now, the bull case is that the company’s profits are growing swiftly enough to make that premium seem more reasonable.
The Nvidia relationship adds another layer, since it supports Palantir’s position in safe AI deployment, one of the areas where clients may be prepared to pay for reliability, control, and flexibility.
If Palantir can continue to show that its platform enables governments and enterprises to apply AI to real-world operations, then the stock may continue to command a premium.
Should growth stall or AI spending become more selective, investors might go back to the old worry that Palantir’s value provides little room for error.
For now, D.A. Davidson’s call suggests that Wall Street may be starting to view Palantir more favorably.
The story is no longer just that Palantir is pricey. The company may simply be growing up to the price investors have been ready to pay.
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